Wellington Adversary Proceedings Attorney

When one files for bankruptcy, it can be overwhelming and scary without the right knowledge and the right help on your side. This can get even worse if a creditor files an adversary proceeding against you, or the trustee themselves. Sometimes you are able to file an adversary proceeding yourself, depending on the situation. These can be intimidating, but in reality, these proceedings are common, and they can be handled with the right legal representation guiding you through from an experienced Wellington adversary proceedings attorney.

What Is An Adversary Proceeding?

In a bankruptcy, the objective for the debtor is to have some or all of their debt wiped away by either liquidating assets or by formulating a repayment plan that meets with creditors’ approval. However, sometimes disputes arise within this framework, and to resolve them, adversary proceedings are the most common tools used – they operate as a sort of mini-lawsuit within the bankruptcy case as a whole. This may seem cumbersome, to have what is essentially another small lawsuit filed while you are navigating through a complex court proceeding, but handling disputes this way ensures there is a record of all the resolutions so that no one can find fault later on.

The most common adversary proceeding usually initiated is when a creditor files for one based on a dispute over whether the debt to them is dischargeable or not. Usually, the creditor is alleging either that a reorganization plan does not sufficiently prioritize their debt (for example, recording it as a junior debt when it is a senior debt), or alleging that there was some type of fraud involved in incurring the debt. Sometimes, a creditor may even file an adversary proceeding to bar your entire case’s discharge if they believe that there has been fraud or a failure to comply with the court’s directives.

Trustee or Debtor-Initiated Adversary Proceedings

While the majority of adversary proceedings are creditor-initiated, a debtor themselves or even the bankruptcy trustee may commence an adversary proceeding in certain situations. Normally when a debtor files an adversary proceeding, it is for one of two reasons – either in connection with what in Chapter 13 is called lien stripping, which is erasing any junior liens on a home or other significant asset which lacks the equity to pay all of them off, or to allege harassment or unfair treatment from a creditor. While the vast majority of creditors will respect the automatic stay and cease any collection efforts, as required by law, every so often a creditor will ignore it or try to act as though it does not apply to them. Initiating an adversary proceeding against them can help fix the issue.

A trustee initiating an adversary proceeding, by comparison, almost always means that there has been some issue involving a transfer. Either a fraudulent transfer has allegedly occurred (that is, the transfer of property for the specific aim of keeping it away from creditors), or the trustee may be trying to stop or investigate what is called a preferential transfer. If a debtor repays a debt within 90 days of their filing for bankruptcy and the debt was for more than $600, a trustee may file an adversary proceeding to ask for it back – it may be that the creditor received more than they would otherwise get in a bankruptcy filing, and to pay their debt when others go unpaid is inequitable.

Enlist A Bankruptcy Professional Today

Adversary proceedings and other issues surrounding bankruptcy can seem incredibly complex, but with the right legal help, they can be managed. If you need experienced legal help, our business minded bankruptcy adversary proceeding attorneys at Markarian & Hayes are happy to try and work with you toward a satisfactory outcome. Call our office today to set up an appointment. We serve Wellington, Vero Beach and Palm Beach Gardens.

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